Capitol Chatter: Oregon has new money, old problems

Published 5:00 pm Thursday, February 10, 2022

8:02 a.m. Wednesday: State economists Mark McMullen and Josh Lehner begin updating the Legislature’s tax committees on how Oregon’s economy and state revenues are faring. These economic and revenue forecasts are released every three months.

8:05 a.m.: House Speaker Dan Rayfield, D-Corvallis, responds to the forecasts by issuing a statement calling for investing more in schools, workers’ skills training, small businesses, childcare, family assistance and mental health care.

8:09 a.m.: During the economists’ presentation, McMullen notes the continuing high inflation and warns, “Inflationary booms traditionally do not end well.”

8:12 a.m.: House Majority Leader Julie Fahey, D-Eugene, issues a statement calling for investing in childcare, housing and homelessness programs, and health care.

8:28 a.m.: Senate Republican Leader Tim Knopp of Bend issues a statement saying the state has more than $900 million in extra revenue and should spend $60 million of it for Oregon State Police to combat crime and $50 million for forest thinning to prevent wildfires.

8:34 a.m.: Gov. Kate Brown issues a statement urging big investments in housing, childcare, workers, business and community safety.

8:47 a.m.: The economists give the bottom line to the tax committee members. The Legislature will have $804 million more to spend during the current 2021-23 budget period than was estimated three months ago. 

So, dear readers, did you find it interesting – as I did – that the governor and legislative leaders were spending the surplus even before it officially was announced? They’re given a heads-up about the forecasts’ content. The forecasts themselves are nonpartisan, incorporating data from varied sources and advisers.

Not surprisingly, the politicians’ responses, and others that followed throughout the day, fell along ideological lines. So did the questions that Democratic, Republican and Independent members of the tax committees asked the economists during the 90-minute videoconference.

Among the folks also issuing statements about how to spend the money were Senate President Peter Courtney, D-Salem; Senate Majority Leader Rob Wagner, D-Lake Oswego; Stacy Chamberlain, president of Oregon AFSCME; and Reed Scott-Schwalbach, president of the Oregon Education Association.

House Republican Leader Vikki Breese-Iverson of Prineville went the other way, saying: “More money for the state is not the same thing as good news for Oregonians.” 

Higher prices: Inflation helped bring in some of those extra tax dollars. Inflation also could consume much of them, as Republicans noted. On Thursday, the U.S. Labor Department said that inflation was the highest since the 1980s. 

By the way, when we bought our house for $56,000 in 1983, our mortgage interest rate was 12.125%. We were thankful the rate wasn’t higher.

As FiveThirtyEight.com reported on Thursday, inflation has a variety of causes, sometimes including such government spending as the pandemic relief payments. However, Democrats and Republicans alike get it wrong when they point partisan fingers at single causes. 

And as McMullen alluded to, there are legitimate concerns about a potential recession ahead.

Fiscal wisdom: Sen. Lee Beyer, D-Springfield, chairs the Senate Finance and Revenue Committee. He concluded Wednesday’s meeting by saying: “Nice to have more money and sometimes bad to have more money. The appetite for expenditures grow[s] and the real trick will be on the revenue-fiscal side … to use that money wisely, I think, on one-time expenses.”

Finding housing: Housing availability and affordability are a crisis throughout Oregon. Beyer pointed out that housing costs are lower in Ohio, where Intel’s plan to build two huge chip factories has rattled Oregon politicians and business leaders. Economist Lehner noted that housing is a greater issue Eastern Oregon than in much of rural America.

Oregon legislators are talking about spending more on housing programs and ways to prevent homelessness. But I haven’t heard much about addressing the high costs of acquiring land, especially in the Portland metro area, and the development fees charged by local governments.

The economists’ written report states: “Oregon has underbuilt housing by 111,000 units in recent decades. Unfortunately the industry is running into supply side constraints. In general these include the lack of financing, particularly for land acquisition, development, and construction loans, which contributes to the low supply of available land and buildable lots. Layered on top of those are local land use, zoning and parking requirements, permitting processes and design reviews, and the like which are generally well-intentioned, but can reduce the timeliness and number of units being built. Furthermore labor is tight, particularly for an industry that has seen zero productivity increases in recent generations.

Legislators’ pay: Since the state’s founding, Oregon has hewed to the concept of the citizen-legislator – part-time lawmakers who come to Salem for a few months and then return home to their regular jobs and resume their community lives. The pay has been correspondingly low, although it’s gone up in recent years, while the workload has expanded as Oregon’s population has grown. 

Some people want to raise legislators’ pay, and provide a childcare stipend, so they won’t need another job. That could diversify the 90-member Legislature, which is tilted toward individuals who are retired or have family situations and good-paying jobs that allow them to be away during legislative sessions.

Senate Bill 1566 would take the legislative salary from $32,839 to about $57,000 and provide a $1,000 monthly childcare allowance for children under age 13. All the sponsors are Democrats, except for Rep. Greg Smith, R-Heppner. 

House Speaker Rayfield is following the example of his predecessor, Speaker Tina Kotek, and trying to hold weekly media availabilities. On Monday, I asked him about the salary proposal. Rayfield said he had not yet read the Senate bill but described it as requiring a pretty big conversation and having the goal of reducing barriers to serving in office. He said it was not a move toward a full-time Legislature.

By the way, while perusing Oregon Department of Revenue manuals for help in preparing my 2021 income taxes, I came across this item: “Oregon law exempts legislators’ compensation for the performance of official duties (legislative salary and expense allowance) from Oregon income tax. This subtraction is available only to members of the Oregon Legislative Assembly who served during the tax year.”

Childcare and public safety: Law enforcement agencies across the country have difficulty recruiting and retaining officers, especially women. Meanwhile, research shows that female police officers are less likely to use deadly force while being just as capable as male officers in carrying out their duties. 

One way for an employer to attract and keep employees is through family-friendly workplace policies, including offering childcare (as my wife’s employer initially did in the 1980s). What would happen if Oregon invested some of its newfound money in onsite childcare for frontline workers of all types.